Neonatal care leave gives eligible employees up to 12 weeks of leave when a newborn spends 7 full and continuous days or more in neonatal care, and Statutory Neonatal Care Pay is paid at £194.32 a week or 90% of average weekly earnings, whichever is lower [1] [2]. The right applies to babies born on or after 6 April 2025 and sits on top of maternity, paternity, adoption and shared parental leave [1] [3].
The government's technical guide estimates that around 40,000 babies spend more than one week in neonatal care each year, that around 60,000 parents will be eligible, and that around 34,000 parents will take paid neonatal care leave every year [4]. For most small employers, that means a request will arrive rarely, without warning, and at a moment when the employee is under acute stress. The payroll and HR process has to work first time.
The entitlement comes from the Neonatal Care (Leave and Pay) Act 2023, which amended the Employment Rights Act 1996 and the Social Security Contributions and Benefits Act 1992 [5] [6]. It introduces two separate rights: a day-one right to leave, and a right to pay that depends on service and earnings.
This guide sets out who qualifies, how the weeks accrue, the tier 1 and tier 2 notice rules, how Statutory Neonatal Care Pay (SNCP) is calculated and taxed, how the employer recovers it from HMRC, and the records and employment protections that follow.
Key takeaways
- Eligible employees get one week of leave for every 7 full and continuous days the baby spends in neonatal care, up to 12 weeks, from the first day of employment [2].
- SNCP is £194.32 a week or 90% of average weekly earnings, whichever is lower, for employees with 26 weeks' service who earn at least £129 a week on average [3] [9].
- All leave must be taken within 68 weeks of the baby's birth [8].
- Tier 1 leave needs only informal notice on the day; tier 2 leave needs 15 or 28 days' written notice [12].
- SNCP is taxable and subject to National Insurance, and employers reclaim 92%, or 109% under Small Employers' Relief, through the Employer Payment Summary [15] [16].
- Records must be kept for 3 years from the end of the tax year they relate to [17].
What neonatal care leave covers
GOV.UK defines neonatal care as care for newborn babies that starts in the first 28 days after birth [1]. It is not limited to a neonatal unit. Acas confirms that "care does not need to take place in a neonatal unit" and lists three types of qualifying care [7].
The three types of qualifying care
The qualifying care types are set out in the employer guidance and the technical guide [1] [4].
| Type of care | Condition | Example |
|---|---|---|
| Medical care in hospital | Starts within 28 days of birth | Admission to a special care or intensive care unit |
| Medical care after discharge | Under the direction of a consultant, with ongoing visits or checks arranged by the hospital | Home monitoring overseen by the treating hospital |
| Palliative or end-of-life care | Starts within 28 days of birth | Hospice or home-based end-of-life care |
The technical guide adds that the care must take place in Great Britain and not in Northern Ireland [4]. The right applies only to employees working in England, Scotland or Wales [9].
The 7-day test and how weeks accrue
The baby must spend at least 7 full and continuous days in care [4]. The day of admission is not a full day, so the count starts on the first full day after admission. The technical guide gives a worked case: a baby admitted on Sunday 20 April 2025 completes 7 full days at midnight on 27 April, and the first possible day of leave is Monday 28 April [4].
Entitlement then builds in whole weeks only. Acas explains that 3 full weeks in care give 3 weeks of leave, while 17 days give 2 weeks, because part weeks are ignored [7]. The entitlement accrues one week in arrears, so a parent cannot take a week of leave that the baby has not yet completed in care [4].
| Days in continuous neonatal care | Weeks of leave accrued | Weeks of SNCP if eligible |
|---|---|---|
| 6 | 0 | 0 |
| 7 to 13 | 1 | 1 |
| 17 | 2 | 2 |
| 21 | 3 | 3 |
| 84 or more | 12 (the maximum) | 12 |
The table applies the full-weeks rule and the 12-week cap set out by Acas and GOV.UK [7] [2].
Twins and multiple births
Where two babies are in neonatal care at the same time, the parent can claim for only one of them, up to the same 12-week maximum [8]. The technical guide states that any overlap of 7 or more days triggers an entitlement attributed to one of the babies [4]. Where the babies are in care at different times, each period accrues separately, still capped at 12 weeks in total [8].
Who qualifies for leave and for pay
Eligibility has two layers. The employee must qualify as a parent with caring responsibility, and as an employee [10]. Leave and pay then have different service tests, which is the point most often missed in payroll.
The parental relationship
A qualifying parent is a biological, adoptive or intended parent through surrogacy, or the partner of the baby's mother with shared caring responsibility [10]. Intended parents in a surrogacy arrangement must apply for a parental order within 6 months of the birth [9]. Acas is clear that the right belongs to the parent, "rather than a grandparent, sibling or extended family" [13].
The employee must be an employee in the legal sense. Acas notes that agency, casual and zero-hours workers are not likely to be employees, and that workers who pay their own tax are not eligible for SNCP [13] [11]. Payroll teams handling mixed workforces need the employment status on record before the first request arrives.
Leave: a day-one right
Neonatal care leave is available from the first day of employment, with no qualifying service [2]. The explanatory notes to the Act state that all employees who meet the conditions are entitled to leave "regardless of how long they have worked for their employer" [6].
Pay: 26 weeks' service and the earnings test
SNCP requires at least 26 weeks' continuous employment up to the end of the qualifying (or relevant) week, continued employment up to the week before pay starts, and average earnings of at least £129 a week before tax over an 8-week period [9]. The £129 figure is the Lower Earnings Limit for the 2026-27 tax year [3].
The relevant week depends on the other leave in play. Acas sets out three cases [11]:
| Situation | Relevant week for SNCP |
|---|---|
| Employee also entitled to maternity or paternity pay | The 15th week before the week the baby is due |
| Adoption | The week the employee is notified of being matched |
| All other cases | The week immediately before the week neonatal care starts |
GOV.UK's reclaim guidance describes the default as the week, Sunday to Saturday, before the child started to receive neonatal care [16]. An employee who fails the pay test still keeps the right to leave, which is then unpaid unless the employer offers more [2].
Tier 1 and tier 2: when leave can be taken
The rules split the 68-week window into two tiers. HMRC's manual defines tier 1 as the period while the child is still receiving neonatal care plus one week after care ends, and tier 2 as the rest of the period up to 68 weeks from birth [15]. All leave must be taken within 68 weeks, just under 16 months, of the birth [8].
How leave is taken in each tier
In tier 1, leave can be taken in separate blocks of at least one week at a time [8]. In tier 2, the remaining weeks are taken as consecutive weeks in a single block and cannot be split [13]. Leave and pay are always in blocks of 7 days, so there is no SNCP for a part week [4] [11].
Notice for leave and pay
The notice rules differ for leave and pay, and for each tier. The table below summarises the GOV.UK employer guidance [12] and the employee-facing claim guidance [14].
| Request | Tier 1 | Tier 2 |
|---|---|---|
| Leave, one week | On the day, ideally before the usual start time; phone, voicemail or text is enough | 15 days' notice, in writing |
| Leave, two or more weeks | Notice at the start of each week of leave | At least 28 days' notice, in writing |
| Pay | In writing, within 28 days of the start of the leave | 15 days (one week) or 28 days (two or more weeks), in writing |
| Cancelling leave | Not applicable | At least 15 or 28 days before, matching the leave |
Acas gives an example of the pay deadline: where care starts on 6 April and the first week of pay begins on 14 April, the written pay notice is due before 12 May [11]. Employers can waive the notice requirement, and cannot refuse leave or pay to an eligible employee who has given correct notice [4].
What the notice must contain
The notice gives the employee's name, the baby's date of birth (or placement or entry date for adoption), the start and end dates of care, the start date of the leave and the number of weeks [14]. For pay, the employee also confirms in a written declaration that they are the parent or the mother's partner and that they will care for the baby during the period claimed [14]. The declaration can be made on form NEO3 or the employer's own form, and no hospital letter or birth certificate is needed [4].
If the employer considers the employee not eligible for pay, it must tell them within 28 days of receiving notice, using a letter or form NEO1 [12]. The employee can then ask the Statutory Payments Dispute Team to review the decision within 6 months [14].
How Statutory Neonatal Care Pay is calculated
For the 2026-27 tax year, SNCP is £194.32 a week or 90% of the employee's average weekly earnings, whichever is lower [3]. Unlike Statutory Maternity Pay, there is no initial 6-week period at 90% of earnings: the lower-of rule applies from the first week [21] [3].
Average weekly earnings
Average weekly earnings are taken over the 8-week period ending with the relevant week [11]. HMRC's online calculator handles the period dates and averaging for weekly, monthly and other pay frequencies [20]. The same earnings figure decides both eligibility, against the £129 Lower Earnings Limit, and the weekly rate [9].
Worked examples
The figures below apply the lower-of rule to three employees, using the published rate and Lower Earnings Limit [3] [9].
| Employee | Average weekly earnings | 90% of earnings | Weekly SNCP |
|---|---|---|---|
| A, earning £2,500 a month | £576.92 | £519.23 | £194.32 |
| B, part-time | £200.00 | £180.00 | £180.00 |
| C, part-time | £120.00 | £108.00 | Not eligible (below £129) |
Employee A is paid £2,500 a month, an average of £576.92 a week, so the flat weekly figure of £194.32 applies. Employee B averages £200 a week, so 90% of earnings, £180 a week, is lower and applies [11]. Employee C falls below the Lower Earnings Limit and receives unpaid leave only [9].
Twelve weeks at the flat amount come to £2,331.84 per parent. Where both parents work for the same employer, both can qualify, because each is entitled in their own right [2].
Enhanced neonatal pay
Employers can pay more than the statutory amount through a contractual scheme [2]. The enhancement is not recoverable: Acas confirms that employers cannot reclaim enhanced neonatal care pay from HMRC [11]. Contractual pay for the same week can be offset against SNCP, and SNCP can be offset against contractual pay, so the employee receives the higher of the two rather than both [15].
Running SNCP through payroll
SNCP is paid through payroll like wages. HMRC's Employment Income Manual states that "SNCP is taxable" as replacement earnings and that National Insurance contributions are payable on it [15]. It goes into gross pay on the Full Payment Submission, which the employer sends on or before each pay day [28].
Tax and National Insurance on SNCP
Because SNCP is ordinary pay for tax purposes, PAYE operates on it using the employee's tax code, and Class 1 National Insurance applies at the 2026-27 thresholds [26] [27]. For an employee whose only pay in a period is SNCP at the flat rate, the result is often no tax and no employee National Insurance, while the employer still pays secondary contributions above the £96 weekly Secondary Threshold [26].
| Example on code 1257L, category A | Gross SNCP | Income tax | Employee NI | Employer NI | Net pay |
|---|---|---|---|---|---|
| Weekly-paid, one week of SNCP | £194.32 | £0.00 | £0.00 | £14.75 | £194.32 |
| Monthly-paid, four weeks of SNCP | £777.28 | £0.00 | £0.00 | £54.04 | £777.28 |
The figures were produced with the Moonworkers calculation engine using the 2026-27 rates and thresholds [3] [26]. A month that mixes salary with SNCP will produce different results, since PAYE is cumulative. Employers modelling the full monthly position can use the Moonworkers UK salary calculator, and the guide to how maternity pay is taxed shows the same mechanics for SMP.
Interaction with other leave and with sickness
An employee already on maternity or adoption leave must take neonatal care leave after that leave ends [2]. If neonatal care leave interrupts other statutory leave, Acas states that the other leave pauses straight away [13]. Employees cannot take two types of leave at the same time [7].
Where the employee is unwell, SSP is paid in place of SNCP, and the employee still has until 68 weeks after the birth to claim SNCP [15]. For the first 7 days, before any neonatal entitlement has accrued, Acas suggests another type of leave, such as time off for dependants, may be needed [7]. Time off for dependants is a reasonable amount of time off to deal with an emergency, and the employer does not have to pay for it [23].
| Entitlement | Leave available | Statutory pay |
|---|---|---|
| Maternity | Up to 52 weeks | SMP for up to 39 weeks |
| Paternity | 1 or 2 weeks | SPP at £194.32 or 90% of earnings |
| Shared parental | Up to 50 weeks shared | Up to 37 weeks of ShPP |
| Parental bereavement | 2 weeks | SPBP at £194.32 or 90% of earnings |
| Neonatal care | Up to 12 weeks, on top of the others | SNCP at £194.32 or 90% of earnings |
The table draws on the GOV.UK guides for maternity [21], paternity [24], shared parental leave [22] and parental bereavement [25]. The Moonworkers guides to shared parental leave and Statutory Paternity Pay cover those entitlements in detail.
Reclassifying leave already taken
Parents often take other leave first and claim SNCP later. The technical guide confirms that employers may reclassify leave already paid as SNCP, and that HMRC systems allow amendments within the same tax year or for a few years afterwards [4]. Any change to the SNCP total also changes the amount reclaimed, which is adjusted through the Employer Payment Summary [16]. Payroll software must therefore be able to correct earlier periods and resubmit, which is a routine task for an HMRC-recognised payroll platform for SMEs but a manual one in spreadsheets.
Recovering SNCP from HMRC
SNCP is one of the statutory payments an employer can reclaim. GOV.UK lists it alongside SMP, SPP, SAP, SPBP and ShPP, with a reclaim rate of 92%, or 109% for employers that qualify for Small Employers' Relief [16].
The 92% and 109% rates
Small Employers' Relief applies where the employer paid £45,000 or less in Class 1 National Insurance in the last complete tax year, ignoring reductions such as the Employment Allowance [16]. The 2026-27 rates guidance confirms 92% above that level and 109% at or below it [3].
| SNCP paid | Standard employer reclaims 92% | Small employer reclaims 109% |
|---|---|---|
| 1 week, £194.32 | £178.77 | £211.81 |
| 4 weeks, £777.28 | £715.10 | £847.24 |
| 12 weeks, £2,331.84 | £2,145.29 | £2,541.71 |
The recovery percentages come from GOV.UK [16]. The extra 9% for small employers compensates for the employer National Insurance paid on the statutory pay [3].
Claiming through the EPS
The employer recovers SNCP by including it in an Employer Payment Summary to HMRC, which reduces the PAYE and National Insurance due for the period [16]. Employers that cannot fund the payment can apply for an advance, repaid later through the EPS [18]. The mechanics are covered in the Moonworkers guide to the Employer Payment Summary.
If an employer fails or refuses to pay, HMRC can pay SNCP directly to the employee, without operating PAYE [15]. The employer must pay SNCP even if it stops trading, and must pay any outstanding SNCP on redundancy [2].
Records and employment protections
Neonatal care leave carries the same type of protection as other family leave, and the record-keeping rules mirror those for SMP and SPP.
Records to keep
The employer must keep the start date of each period of SNCP, the payments made and their dates, and any weeks claimed but not paid with the reason [17]. It must also keep the written declaration, the baby's name, and the dates neonatal care began and ended [17]. Records are kept for 3 years from the end of the tax year they relate to, and form NEO2 can be used to hold them [17].
Protection from dismissal, detriment and redundancy
The explanatory notes confirm protection from dismissal or detriment for taking the leave [6]. Acas adds that an employee returning after neonatal care leave alone has the right to return to the same job, and that a role cannot be selected for redundancy because the person has taken or plans to take the leave [19].
After 6 consecutive weeks of neonatal care leave, the employee gains additional redundancy protection, including priority for suitable alternative roles, for a protected period of 18 months from birth, placement or entry into Great Britain [19]. Legal commentary published when the regulations were laid describes dismissal connected with neonatal care leave as automatically unfair [29].
Pay rises and holiday
Employees on neonatal care leave keep their rights to pay rises, to build up holiday and to return to work [1]. Almost all workers are entitled to 5.6 weeks of paid holiday a year, and that entitlement continues to accrue during the leave [30] [2].
A practical checklist for employers
A neonatal care request tends to arrive by text message on the first morning, so the process has to be ready before it is needed. The steps below follow the order set out in the GOV.UK employer guidance [2] and the notice rules [12].
- Accept tier 1 notice by phone, voicemail or text, and log the date and time.
- Confirm employee status, the parental relationship and that care began within 28 days of birth.
- Count full days in care and record the weeks accrued, up to 12.
- Check 26 weeks' service and average earnings against the £129 Lower Earnings Limit for SNCP.
- Obtain the written declaration for pay within 28 days of the start of leave.
- Pay SNCP through the FPS, and reclaim 92% or 109% through the EPS.
- Keep the records for 3 years from the end of the tax year.
Bureaux running this across many client schemes benefit from a multi-client payroll dashboard that holds the declaration and accrual data per employer. Platforms that want to offer SNCP inside their own HR product can call the HMRC-recognised payroll API, which calculates statutory pay alongside PAYE and RTI.
Conclusion
Neonatal care leave fills a gap that maternity and paternity rules left open: the weeks a newborn spends in hospital no longer consume the parents' other family leave. For employers, the right is simple in principle (one week per full week in care, up to 12) but detailed in practice, with two tiers, two notice regimes, a pay test distinct from the leave test, and recovery through the EPS.
The administrative burden falls on payroll rather than HR, because the accrual, the lower-of rate, the retrospective reclassification and the reclaim all happen in the pay run. As family-related statutory payments multiply, the employers that cope best will be those whose payroll engine treats each new payment type as configuration rather than a manual workaround.
Frequently asked questions
Is neonatal care leave paid if the employee has just started the job?
The leave itself is a day-one right, so a new starter can take it [2]. Statutory Neonatal Care Pay, however, needs 26 weeks' continuous employment up to the relevant week and average earnings of at least £129 a week [9]. A new starter therefore usually receives unpaid leave unless the employer offers contractual pay.
Can both parents take neonatal care leave at the same time?
Yes. Each qualifying parent has their own entitlement of up to 12 weeks, so both can be off together [2]. The partner of the baby's mother qualifies where they share caring responsibility [10].
Does neonatal care leave reduce maternity or shared parental leave?
No. GOV.UK states that neonatal care pay and leave come in addition to other parental pay and leave entitlements [1]. A mother on maternity leave takes neonatal care leave after the maternity leave ends [2].
Is Statutory Neonatal Care Pay taxable?
Yes. HMRC treats SNCP as replacement earnings taxed as employment income, with National Insurance contributions payable [15]. It is reported in gross pay on the FPS and the employer reclaims 92% or 109% through the EPS [16].
Image prompt: Editorial photograph, an HR administrator seen from behind at a wooden desk in a small brick-walled office in Manchester, reading a printed leave request letter beside an open desk diary and a printed payroll schedule, a wall calendar with several weeks circled in pencil on the wall in front of her, soft overcast daylight through a tall industrial window, mid-morning, muted palette of slate grey, oak, paper white and dusty green, red-brick mill buildings visible through the window, off-centre composition with the figure in the left third and the calendar in the right third, shot on a Fujifilm X-T5 at 33mm f/2.8, photojournalism, 35mm film grain, no AI artefacts, no warped hands, no warped text, landscape orientation 16:9.
